Commander in Pips: So, we’ve learned the basics of all these lines – support, resistance, trend lines and channel, now it’s time to talk about their application in practice…

Pipruit: At last – practice… This word makes my heart tremble with joy.​

Commander in Pips: As we already know any line can provide either support or resistance initially. Hence there are only two major price behaviors are possible after it has reached the line – bouncing from it or breaking it. But first, memorize this very important notice:

Notice:

We strongly do not recommend that you use any line types as a single context for trading. You should use lines as an additional tool in an overall trading plan and trading context.

This will become clearer, when we will study all the other tools and provide an algorithm on how to create a trading plan and what parts it should contain. But currently just remember, that it is better not to make trades that are based only on lines.

Pipruit: Ok, thanks​

Commander in Pips: So, as we’ve said market can pull back from the line or break it, so let’s take a look at these possibilities closely:

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Pullback or Bounce

As you understand, this kind of scenario assumes that the line will not be broken and will hold the price action. But who knows this ahead of time? Yes, you see the line, and know about the price level, but will it hold or not? – nobody knows in advance. So, what do you prefer? – enter to the trade right from the line without knowing – will it hold or not, or wait some confirmation of strength?

Economic Calendar, Money Transfers, Traders Tools

Trading FX or CFDs on leverage is high risk and your losses could exceed deposits.

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